Apple (AAPL) always beats earnings forecasts. In the last quarter, it hit revenue of $6.22 billion and had a profit of $1.01 a shares. It sold 10.2 million iPods, 1.1 million iPhones and almost 2.2 million Macs.
But, the company forecast that next quarter revenue would hit $9.2 billion and $1.39 in EPS. In an unlikely change of tactics, Yesterday, Apple guided above where Wall St. thought the company would be in the last calendar period of the year.
To put the numbers in perspective, Apple is saying it will have sequential revenue growth of 48% and sequential earnings growth of 36%.
In the last quarter of 2006, Apple had revenue of just over $7.1 Billion. So, year-over-year, it is expecting the top line to go up 30%. That is a faster growth rate than last quarter, and off a larger number from 2006.
The biggest barrier Apple faces now is that the PC makers have to see the Mac company as a real and significant threat. It is moving toward selling 10 million Macs a year. Dell (DELL) cannot afford to see those sales come from its customers. And, Hewlett-Packard (HPQ) has to keep the miracle of its turnaround alive, Its 52-week high stock price depends on it.
What almost always happens in these situations is that the companies which are threatened improve their products and cut prices to defend their market. HP and Dell already have fancier computers that look and feel more like the Mac. They are loading them up with the latest processors from Intel (INTC), and, as the holiday approaches, count on price cuts. Big cuts, Cuts to bring the customer in and keep them away from the Apple store.
The big retailer sellers for PCs like Best Buy (BBY), CostCo (COST), and Circuit City (CC), have to defend their share. If Jobs has made one mistake with the Mac it is that only his own retail outlets sell it. That kind of program ended up hurting Dell two years ago.
Apple will get its iPod sales in this quarter, no matter what Microsoft (MSFT) does with the Zune. And iPhones will sell well no matter how good the Nokia (NOK) multimedia phones are.
But, the competition must strike back at the Mac. It can’t afford not to.
Douglas A. McIntyre
Essential Tips for Investing: Sponsored
A financial advisor can help you understand the advantages and disadvantages of investment properties. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
Investing in real estate can diversify your portfolio. But expanding your horizons may add additional costs. If you’re an investor looking to minimize expenses, consider checking out online brokerages. They often offer low investment fees, helping you maximize your profit.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.
Editors' Picks
